Somebody Call a Plumber

It has been three weeks since the creation of Senator Duncan’s Subcommittee on Fiscal Matters, the panel charged with finding around $5 billion in non-tax revenue to cover the funding the Senate Finance Committee intends to restore to public education and health and human services, among other items. Today we finally got a glimpse of what is on the table, courtesy of conservative gadfly Michael Quinn Sullivan, who was leaked a draft of a list of possible revenue sources compiled by the subcommittee. Duncan had scheduled a meeting for this afternoon, apparently for an unveiling, but abruptly canceled it. He had been pretty tight lipped up to now about what the committee had been studying, not wanting to give the chattering classes a chance to torpedo ideas before they had a chance to surface on their own. But somebody on the committee apparently thought a few torpedoes were in order, and who better than Sullivan to man the periscope? He wasted no time this afternoon pointing out that, in addition to recommending the sale of various state properties and a variety of creative accounting tricks, the list contains over $1 billion in new (or higher) taxes or fees. Here is a partial list of the items under consideration, in a nice bulleted list I cribbed from the Texas Taxpayers and Research Association site:

The first problem that strikes you as you read over this list is how many of these measures would have to originate in the House, such as all of the items that deal with rolling back tax exemptions. It seems late in the game to be getting the House on board, though in fairness, many of the suggestions on the list are already working their way through the House in various bills. Still, I was surprised to hear that House Ways and Means Chairman Harvey Hilderbran had yet to see the list when I gave him a copy on the House floor this afternoon. He read over it during the lengthy debate on Craddick’s texting bill and gave me his first impressions. Many of the items were ideas he had never heard before. In general, he said items that could plausibly be framed as tax equity measures were more likely to get a hearing in his committee. He included in this camp Rep. Otto’s online shopping tax (H.B. 2403), which brick and mortar retailers have been seeking for years (revenue gain: $16 million; Rep. Naishtat’s more muscular version reaps much more, but has not been blessed by the chairman). He also suggested that this category might include measures repealing tax exemptions for computer programmers and data processors. “You know, Michael Quinn Sullivan’s group is going to say that everything is a tax increase. See, I don’t happen to accept that. Not if it’s generally accepted that there is an inequity in the tax code where one class of business has a competitive advantage over another class.” Hilderbran pointed out that Grover Norquist himself has blessed such “fairness” measures from time to time in the past, even if they mean that somebody will be paying a tax they didn’t pay before. “If it’s a tax equity issue, we’re gonna hear it,” he said. But he added: “That does not mean we’re gonna pass it.” Repealing the high cost natural gas tax exemption, which has gotten a lot of attention lately and which would bring in enough revenue (savings: up to $426 million) to be a real game changer, is off the table as far as Hilderbran is concerned. “In times like these you want to incentivize any kind of business activity. And natural gas is so cheap right now, you’ve got to keep every incentive you’ve got or you’ll lose a lot of that activity.” I pointed out that from the perspective of the coal industry (or utilities that own coal-fired plants) the exemption for gas drillers is a “fairness” issue. “That dog don’t hunt,” Hilderbran said, “because we ain’t got coal.” All of our coal is imported, he said, except for the “crummy kind” we have in east Texas. Fairness doesn’t count when it comes to Wyoming businesses who compete with Texas ones. Nor does he like the chances for repealing the timely filer discount, which rewards retailers who pay their sales taxes on time (savings: $85 million). “It’s in committee now, but I don’t think we have the votes for it.” Hilderbran said he thought taxing satellite TV service would actually bring in much more than the figure cited on Duncan’s draft document ($115 million), but it would be a tall order. “It’s difficult because there’s a lobby war over that. You’ve got AT&T and the satellite people fighting the cable companies. But it’s possible in this climate.” He said this tax would be more palatable if it was used to buy down other taxes, like the property tax refund, or the million dollar small business exemption from the margins tax. Of course, that wouldn’t move the ball at all. Duncan and his subcommittee members have done some admirable work, but whether and how the ball moves will be largely up to the members on Hilderbran’s side of the building. Hilderbran said he and Duncan were supposed to get together next week to talk revenue. Better late than never. NATE BLAKESLEE

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